copyright 2014 © w. seth hunter consumermath.org l8.1 automobile insurance- part 1 medical...

Copyright 2014 © W. Seth HunterConsumerMath.org

L8.1 Automobile Insurance- Part 1

MEDICAL INSURANCE

Medical insurance is designed to protect your finances from an unforeseen large medical

expenses.

Squeal, Crash, Crunch!!!

Oops, did I do that?

Personal Finance:

Automobile Insurance- Part

1



Lesson Objective

Students will learn what automobile insurance is, how it works, and how

much it costs.



What is Auto Insurance?Auto Insurance is a little-bit like Medical

Insurance. It is any agreement whereby an individual pays to the insurance company an amount of money now in exchange for the company paying a portion of the individual’s auto expenses later.

It could cover a broken windshield, keys locked in the car, or even flat tire repair. But most often, it is used to financially protect you and your vehicle from the damages caused by an accident.



Insurance Definitions• Insurance Policy: The written document of a

contract for insurance.

• Claim: Any request or demand for payment under the insurance policy.

• Premium: The amount of money an individual pays to the insurance company each month to purchase auto insurance .

• Ex: $300 per month.• Coverage: Benefits specifically provided for under

the insurance contract.• Ex: Replace windshield, payment for injury or

death, towing.



Insurance Definitions• Coverage Limit: The maximum amount the

insurance company will pay for a particular claim.• Ex: $15,000 per person & $30,000 for more

than one person.

• Co-Payment: The amount of money the insured must pay on each loss before the insurance will pay anything for that particular loss.

• Ex: $250 per loss claim.

• Liability: Any legal financial responsibility for the injury or damage suffered by another person.



Insurance Definitions• Comp & Collision: Optional insurance that pays,

to repair your vehicle if it is damaged.• Ex: Someone steals your car, or your car gets

totaled because you ran a red light.

• Rental Car: Optional Insurance that provides a rental car should your car become un-drivable.

• Emergency Road Assistance: Optional Insurance that pays for help which may include, but is not limited to, towing, tire change, or keys locked in car.



Insurance Definitions• Medical Coverage: Optional Insurance that

covers all medical bills resulting from a claim above and beyond the coverage limits

• Good Student Discount: A discount on the insurance premium given because the driver is a good student.

• Ex: 40% off your premium because you maintain a 3.0 gpa

• Glass Coverage: Optional Insurance that pays to repair or replace your vehicle’s broken windows.



Insurance Definitions• Safe Driver Discount: A discount on the

insurance premium given because the driver has had no tickets or accidents in recent years

• Ex: 50% off your premium because you drive safely

• Deductible: The amount of money the insured must pay on each claim before the insurance company will pay for the remainder of the bills up to the coverage limit

• Ex: $200 per loss



The LawCalifornia law states that:

“Financial responsibility is required on any vehicle operated or parked on California roadways.” (dmv.ca.gov)

What that means is that the owner of any vehicle driven or parked on California roads has to have enough money to compensate someone injured, or something damaged, by that vehicle.



The LawCalifornia defines the minimum financial responsibility as being:

$15,000 for injury/death to one person $30,000 for injury/death to more than one person $5,000 for damage to property

This is otherwise written as: 15/30/5



The LawCalifornia defines the minimum financial responsibility as being:


This is otherwise written as: 15/30/5All 50 states have a similar law!

As of 2011, here are a few others:

Alaska 50/100/25 Arizona 15/30/10Texas 30/60/15 New York 25/50/10Ohio 12.5/25/7.5 Oklahoma 10/20/10



The LawIf you live in California, what is the minimum amount of money the law says you need to have sitting in the bank in case you rear-end the car in front of you?

California requires 15/30/5

$15,000 for injury/death to one person 30,000 for injury/death to more than one person + 5,000 for damage to property $ 50,000 For a Millionaire, No Problem!

For the rest of us, We need Auto Insurance.



Review:

1. What is Auto Insurance?

2. What does 30/60/15?



Review:

1. What is Auto Insurance?

2. What does 30/60/15?

Any form of insurance that pays for automobile expenses. More precisely, any agreement whereby an individual pays to the insurance company an amount of money now, also known as a premium, in exchange for the company paying a portion of the individual’s auto expenses later.


copyright 2014 © w. seth hunter consumermath.org l8.1 automobile insurance- part 1 medical...

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